BRICS countries have no interest in weakening the U.S. dollar at all, India's foreign minister Subrahmanyam Jaishankar said at an event in Qatar's capital Doha on Saturday.

His remarks came a week after U.S. President-elect Donald Trump had demanded that BRICS member countries, which include major emerging economies like India, Russia and China, commit to not creating a new currency or supporting another currency that would replace the dollar. If they move in this direction, he threatened them to face 100% tariffs.

Trump's warning, delivered via a post on Truth Social, was characteristically blunt. There is no chance that the BRICS will replace the US Dollar in International Trade, and any country that tries should wave goodbye to America, he stated. The President-Elect further demanded a commitment from these countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty US Dollar. Failure to comply, he warned, would result in a 100% tariff and a farewell to selling into the US economy.

This warning comes after Trump had previously threatened higher tariffs on imports from China, Mexico, and Canada. However, his threat to the BRICS nations seems premature, given that External Affairs Minister (EAM) S. Jaishankar has already categorically ruled out the idea of a common BRICS currency.

BRICS Response and the Idea of a Common Currency

There is no idea of a BRICS currency. Currencies will remain a national issue for a long time to come, Jaishankar said last year ahead of the group's summit in Johannesburg. Despite this, Brazil's President Luiz Inacio Lula da Silva proposed a common currency at the Johannesburg summit, a proposal that has made no headway.

Trump's warning, therefore, appears to be more of a loyalty test to see which countries would publicly take the stand India already has, and a pre-emptive warning to Beijing. The BRICS, an acronym from the names of its first set of members -- Brazil, Russia, India, China, and South Africa -- expanded this year to include Iran, Egypt, Ethiopia, and the United Arab Emirates (UAE). Several other countries have applied to join BRICS, which is making headway as an economy-focused organisation of the Global South.

However, with members in a wide range of stages of economic development and types of economies, creating a common currency would be difficult. Accepting the currency of one member as the group's trading currency would be impossible. China, which is the largest economy and the biggest trading country in the group, would tend to dominate with its yuan, which India and some of the other countries will resist.

The US Dollar and Historical Precedence

The US-led sanctions on countries like Russia and Iran have helped grow some bilateral trade in non-dollar currencies. Fueled in part by US sanctions against Russia, India has paid for its oil imports from Russia with a mix of rupees and UAE dirham. An Indian oil importer initially made some payments in yuan, and although Russia reportedly wanted payments in the Chinese currency, the Indian government has banned it, illustrating the difficulty of adopting a BRICS currency.

The European Union has the euro, but it is for a unified economic unit --which BRICS is not and cannot be -- and most of their external trade is pegged to the dollar. In addition to being the preferred currency for trade, the dollar is the main currency in which countries hold their reserves. According to an International Monetary Fund publication in June, the dollar continues to have an outsized role in the world economy, but there has been an ongoing gradual decline in the dollar's share of allocated foreign reserves of central banks and governments.

Trump's warning to the BRICS nations is reminiscent of the 1971 Nixon Shock, when President Richard Nixon unilaterally canceled the direct international convertibility of the United States dollar to gold. This move effectively ended then existing Bretton Woods system of international financial exchange, leading to a period of currency realignment and fluctuation.